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from - Elman Wilf & Fried
March 11, 1995

To Our Clients and Friends:

On December 8, 1994, Congress amended United States law to conform to the General Agreement on Tariffs and Trade (the "GATT Uruguay Round"). In doing so, they revised key portions of U.S. patent law, while making less drastic changes to the law of copyrights and trademarks. This letter will highlight the most significant changes that may affect our clients in the United States.

Patents May Last Longer

Congress has changed the law to harmonize certain U.S. practices with international practice. The United States Patent and Trademark Office ("PTO") currently grants patents for a term of 17 years. The patent's term begins on the day the patent is issued, regardless of when the original patent application was filed. The PTO is required to keep the contents of the application secret from the filing date of an application to the issue date of the corresponding patent. If a U.S. patent never issues, the application is never published.

These practices have been criticized as creating a perverse incentive on patent applicants. Those with inventions in emerging technologies are said to be encouraged to take steps that would keep their applications pending until the technology develops and the potential for profit increases. Some who object to this policy apply the label "submarine patent" to such long-pending applications. These are said to remain "submerged" in the PTO while an emerging technology blossoms, later "surfacing" to surprise an industry.

In contrast, most foreign countries calculate the term of their patents from the date the application is filed. A typical term is 20 years. In most such countries, the patent is unenforceable until it is formally granted. So a patent that is pending for two years before it is granted would be enforceable for a term of 18 years. Also, many countries publish patent applications at a fixed period after the filing date, often 18 months, regardless of whether patent rights are ever granted.

Due to recent international trade agreements, including the GATT Uruguay Round, the United States will change the term of enforceability for patents filed after June 7, 1995. The present term of 17 years from issuance of the patent will no longer apply. Instead patents will be effective for 20 years from when the earliest relevant application is filed. To smooth this conversion, Congress and the PTO have established transitional provisions and regulations that will benefit holders of some United States patents.

Transitional Provisions

Under the transitional provisions, the term of a certain group of patents will extend for the longer of two alternative calculations: 17 years from the date the patent issued, or 20 years from the filing date of the first U.S. patent application upon which the issuing patent is based. This provision applies to all patent applications now pending, to all patent applications filed between now and June 7, 1995, and to all issued patents that are in force on June 8, 1995.

Owners of pending or issued patents do not have to file anything with the government to take advantage of this bonanza. They will get it automatically. Also, there will be no additional fees. The sequence of maintenance fees remains unchanged, coming due 3.5 years, 7.5 years and 11.5 years from the date the original patent is granted.

New Applications

For each new patent application filed on or after June 8, 1995, any patent that issues will generally expire 20 years from the filing date. The following shows when a U.S. patent is scheduled to expire.

- Calculator of Expiration of U.S. Patents

1. If a U.S. Patent Application is filed by June 7, 1995, and if the patent issued before June 8, 1978, then the patent expires 17 years from issuance. (1)

2. If a U.S. Patent Application is filed by June 7, 1995, and if the patent issues after June 7, 1978, then the patent expires the later of 17 years from issuance, or 20 years from filing of earliest U.S. parent application. (1) (2)

3. If a U.S. Patent Application is filed after June 7, 1995, then the patent expires 20 years from filing of application. (1) (2)

Notes: (1) Provided that all maintenance fees are paid. Plus up to 5 more years for marketing delay due to an FDA or Virus-Serum-Toxin approval process.

(2) Plus up to 5 more years for successful appeals from the Patent Examiner and any interference proceeding.

Anticipating the Expiration of a Patent

Congress has included a limitation on the patent term extension in order to protect businesses that have relied on the "old" patent term and made reasonable assumptions about the date the patent would expire.

If a competitor starts to commercialize the patented invention or makes a substantial investment towards commercializing it before June 8, 1995, in anticipation that the patent was about to expire at the end of a 17-year term, then that business may continue these otherwise-infringing acts if they pay the patentee an "equitable remuneration" set by a court. If you are in the process of developing a product to be launched after someone else's patent expires, it will be important to take into account the possible change in its expiration date.

Best of All Worlds: Applications Filed by June 7, 1995

As noted above, Congress created a window of time during which a patent applicant can get the best of all possible worlds -- or at least the better of the two alternative patent terms. That is, if a U.S. patent application is filed before June 8, 1995, when it eventually issues its term will be the longer of 17 years from date of issue or 20 years from date of filing. If patent prosecution is quick, the term during which the patent can be enforced may be longer than 17 years. But if patent prosecution is slow (perhaps because of an appeal or an interference proceeding) then the term will not be diminished from 17 years after the date the patent issues.

If you are at work on any new inventive developments, consider this window of opportunity to file a patent application that can take advantage of the special patent term provision. Unless Congress changes the law enacted December 8, 1994, no patent application filed after June 7, 1995, will be assured that the patent term will be as long as 17 years. Moreover, although the new law provides some amelioration of patent term if there is an appeal or interference, there is reason to believe that in many instances the term would still be significantly shorter. For long-lived inventions such as pharmaceuticals, royalties or revenues received near the end of the term can be a substantial amount of money. It is anticipated that a rush of patent applications will be filed shortly before June 8, 1995, in order to take advantage of this special opportunity to "lock in" a longer patent term by filing a patent application.

Review Your Patent License Agreements

Another result of the new law is that agreements, such as patent licenses, that extend until a patent expires may now be significantly affected by the change. Therefore, it would be appropriate to examine all contracts in which you license patented technology to or from others with this change in mind.

The first thing to look for is whether royalty or other obligations extend to a stated date or until a particular patent expires. If your agreement is written to expire on a stated date, now may be the time to begin to negotiate new agreements to take into account the extension of the patent term. In the latter case, the expiration date of the relevant patent might be affected by the change described above. If so, the contract may continue for longer than you initially expected.

Additional Protection against Patent Infringement

In addition, the new law expands the protection a patentee can receive for patent claims. Formerly, the patentee had the right to prohibit others from making, from using or from selling the claimed invention in the United States, and from doing certain other infringing acts. Effective June 8, 1995, for all U.S. patents, the law is amended to prohibit others, in addition, from offering to sell the claimed invention or from importing it into the United States from abroad. If you suspect others may be infringing your patent, now would be a good time to evaluate your remedies against them. For those in the business of importing products, it would be desirable to evaluate whether any products you import infringe someone else's patent.

Changes to Copyright and Trademark Law

In response to NAFTA and the GATT Uruguay Round, Congress has also made some changes to U.S. copyright and trademark law, and further changes are likely in the future. Let us know if you would like to be advised of them.

If we can help you or anyone you know, please be sure to contact us. And please keep us in mind for the future.

Elman Wilf & Fried Tel (610) 892-9580
20 West Third Street Fax (610) 892-9577
P.O. Box 1969 Patent, Trademark,
Media, PA 19063 Copyright and Business Law
Contact: Frederic M. Wilf CompuServe 72300,2061 Internet wilf@elman.com

Copyright Notice: This document is Copyright (c) 1995 Elman Wilf & Fried. Copies of this document may be copied and distributed at no charge so long as (1) no changes are made to this document and (2) no charges are imposed for access to this document other than any normal connect or download charges.

Disclaimer: This document contains information of general applicability and does not constitute legal advice. For an opinion or advice on how the law affects you, you should retain a qualified attorney.

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